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Secondary buy-outs help produce busiest quarter for UK buy-outs since 2000

A rash of secondary buy-outs in the third quarter helped produce the busiest period for private equity firms in the UK since 2000, according to figures from accounting firm KPMG.

There were 43 deals completed in the latest three months with a total transaction value of £4.49bn, compared with 32 deals in the second quarter worth £5.15bn. Twelve of the deals in the latest period were secondary deals - sold from one private equity firm to another - accounting for 54 per cent of the quarter's value.

Charles Milner, head of corporate finance at KPMG, said secondary deals had introduced a 'healthy degree of liquidity' to the market but acknowledged that often they were motivated by a desire to exit deals in advance of fundraising.

KPMG said it expected 2004 to turn out to be more active than last year and to outstrip 2003's total of £15.6bn.

'2004 looks set to finish on a high. Already in the fourth, two separate billion pound deals, the AA and Saga, have featured and we are seeing a strong pipeline of activity in our business across all deal sizes,' Milner said.

'The fundamentals of the buyside of the private equity equation look strong with private equity houses confident ahead of the next round of fundraising and banks prepared to back healthy debt ratios in the quality deals,' he concluded.

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